HomeScience & TechAddressing the Looming Mass Extinction: Linking Environmental and Economic Indicators

Addressing the Looming Mass Extinction: Linking Environmental and Economic Indicators

Earth is currently facing the beginning of a mass extinction event, with species disappearing at an alarming rate, estimated to be 100–1,000 times faster than natural extinctions. This crisis is unique in that it has been triggered by the actions of a single species: humans. The 15th Sustainable Development Goal (SDG) set by the United Nations aims to reverse this impending catastrophe by focusing on protecting, restoring, and promoting sustainable use of terrestrial ecosystems, managing forests sustainably, combating desertification, halting land degradation, and stopping biodiversity loss.

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However, progress toward achieving SDG 15 is far from on track. In 2019, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) reported that terrestrial ecosystems had already lost more than 20% of their original biodiversity, and millions of terrestrial species could go extinct by 2100. The primary driver of this loss is large-scale land conversion for human use, particularly by agribusiness and industry.

Although some progress has been made in tracking biodiversity in official statistics in various countries, it is just a partial solution. The true challenge lies in the fact that the costs of environmental damage, including biodiversity loss, are rarely factored into countries’ official economic calculations.

Clearing forests for construction, agriculture, or fossil fuel exploitation is often seen as an economic gain rather than a loss. This skewed economic perspective has led to gains in reducing poverty and improving human welfare at the expense of the environment.

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To address this issue, there has been a decades-long effort to integrate environmental indicators more closely with economic ones. The System of Environmental Economic Accounting (SEEA) has become the global standard for measuring nature’s contribution to the economy and the impact of economic activity on the environment. It measures environmental assets (e.g., forests, minerals) and flows (e.g., water consumption by industry).

Many countries have incorporated SEEA data into ‘satellite’ accounts that monitor sectors not traditionally included in national accounts. This data, which was initially used by researchers and policymakers in conservation, is now gaining attention in finance and economic decision-making.

Currently, the UN Statistics Division is soliciting expert input for the next revision to the System of National Accounts (SNA), which is the international statistical standard for measuring economic activity. This revision is an opportunity to better link SEEA and SNA, potentially prompting economic policymakers to consider biodiversity loss, climate impacts, and other environmental costs more seriously.

Failing to account for the environment’s value and the costs of its degradation has significant consequences. A systematic approach to addressing these trade-offs is necessary for achieving the SDGs. Adequately funding national statistical offices to coordinate environmental accounts is also crucial. Economic policy decision-makers must recognize the hidden costs of environmental degradation to have any hope of halting the ongoing mass extinction event.

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